Sulfated carbohydrates such as glycosaminoglycans control many, diverse processes affecting human health including blood clotting, immune and neural cell migration, viral and microbial infection, and growth factor/receptor signaling. However, for many of these processes, how the sulfated carbohydrates mediate their biological effects at the mechanistic level is not understood, presenting a barrier to our ability to harness the properties of these molecules for therapeutic purposes. Drosophila embryo dorsal-ventral polarity is determined by a sulfated carbohydrate embedded in the eggshell that influences serine proteolytic activity in the perivitelline space between the embryonic membrane and the eggshell. Gastrulation Defective (GD) processes and activates Snake, Snake processes and activates Easter, and Easter cleaves the Spaetzle precursor into a ligand for the transmembrane receptor Toll. Activation of Easter occurs solely on the ventral side of the egg under the control of Pipe, a homologue of vertebrate glycosaminoglycan sulfating enzymes that is expressed in ventral follicle cells of the developing oocyte. Pipe transfers sulfate to the carbohydrate side chains of glycoproteins that become incorporated into the inner vitelline membrane layer of the eggshell and constitute a ventral cue that promotes processing of Easter by activated Snake. The long-term goal of this project is to determine how the sulfated ventral cue controls the spatially restricted processing of Easter, and in turn, the activation of Toll. Th central hypothesis, which is based on the recent observation that GFP-tagged GD becomes ventrally localized in the perivitelline space, is that processed GD binds to the sulfated ventral cue and once concentrated there, facilitates an interaction between Snake and Easter that results in Easter processing. The proposed investigations pursue three specific aims: 1) To elucidate the mechanism that controls the ventral localization of GD within the perivitelline space of the egg by determining the extent to which GD processing is required for its localization and by identifying determinants within GD that are required for localization and processing. 2) To determine how localized GD mediates the cleavage of Easter by Snake by identifying the GD domains that are required for its interactions with Easter and Snake, and by determining the extent to which GD promotes Snake protease activity, Easter susceptibility to cleavage, or productive interaction between the two proteins. 3) To elucidate the structure of the Pipe-modified carbohydrates that comprise the ventral cue and determine how these molecules facilitate GD localization and Easter processing by isolating VML, a key eggshell protein modified by Pipe, examining its associated carbohydrates by mass spectrometric analysis, and identifying proteins that interact with it in a Pipe/ventral cue-dependent manner. The proposed studies are significant because in the course of elucidating the molecular mechanism underlying this paradigmatic developmental pathway, they will yield new insights into the ways in which serine proteases and other medically important proteins are influenced by their interactions with sulfated carbohydrates.